News

Youth sports referees cry foul over San Jose taxes and fees

By John Woolfolk jwoolfolk@mercurynews.com

Posted:
02/02/2013 04:34:50 PM PST

Updated:
02/02/2013 04:34:50 PM PST

SAN JOSE -- Lynn Dyche didn't spend 35 years refereeing youth wrestling matches for the money. As he told San Jose officials, he once spent 14 hours officiating a high school tournament for which he was paid $65.

So he and others involved in youth athletics were alarmed when San Jose began notifying high school sports umpires and referees to either pay the city business tax -- a minimum of $150 a year -- or pay $38 to process an exemption if their side job as sports officials made less than $22,000 a year.

"To charge them for this is just totally ridiculous," Dyche said. "We're helping kids, we're helping schools, we're helping families and parents by providing a service to officiate high school competitions. And if we start charging officials business taxes for that, you're going to run them right out of the city, because they're not making that kind of money. They're certainly not doing this to make a living."

The issue came up this year as the city sent notices to businesses and independent contractors -- a category that includes the youth sports officials -- that had filed state tax forms but had not paid the city business tax or exemption fee over the past four years. The notice advised them of an "amnesty" available through March 29 in which they can make delinquent payments without penalties.

Advertisement

But many were blindsided by the notices, saying they never thought they owed the city taxes or an exemption fee and that the cost would be too much of a burden for what they argue is effectively volunteer work. Lynn said an average sports official might make $500 a year, and a busy one perhaps $2,500. But school sports officials say it already is difficult to find willing participants.

"We're very concerned about this, because it does have an impact to our schools," said Duane Morgan, assistant commissioner for the California Interscholastic Federation's Central Coast Section, which governs high school athletics from San Francisco to King City.

"Somebody's going to have to pay for this," Morgan said. "The art of officiating is a labor of love. They're not making money here. To add another burden on them drives people away."

Elias Chamorro Jr., a former supervisor of East Side Union High School District athletics programs, agreed, arguing that with the cost of travel and training factored in, officiating youth sports is effectively volunteer work.

"It does not make any sense to require this fee when the referees are basically making no money," Chamorro said, adding that the tax burden would likely be borne by the schools. "Any additional cost to the officials will, without any doubt, increase the costs of officiating directly to the schools."

The tax and fee critics got a sympathetic hearing from city officials including Mayor Chuck Reed at the agenda-setting Rules and Open Government Committee Jan. 30, where Councilman Don Rocha raised concerns about it.

While it appeared doubtful any youth sports referees would earn enough to have to pay the city business tax, Finance Director Julia Cooper explained that the $38 fee for processing their exemption claim pays for staff time to verify that through income tax records they must submit.

Reed suggested city finance officials consider allowing sports officials to avoid both the tax and exemption processing fee by simply checking a box declaring that they didn't earn more than the exemption threshold -- the honor system.

The mayor urged finance officials to think over alternatives and return to the committee Feb. 13 but indicated there wasn't much interest among the city's elected leaders in dinging umpires and referees with a tax or fee.

"I get the sense that the committee really isn't interested in making our high school referees pay a tax," Reed said at the committee meeting. "We don't really think that's a business."

Even so, as committee member and Councilman Pierluigi Oliverio noted, there are other considerations. The 7,200 businesses and contractors qualifying for the business tax exemption pay the city $250,000 in processing fees, an amount Oliverio said is roughly equal to the annual cost of a police officer or a couple librarians.

He added that there's a slippery slope when it comes to justifiable exemptions that doesn't just stop with sports officials. Part-time music teachers and dance instructors, for example, also could argue for a similar break.

"Once you start on one, you expand it," Oliverio said. "Keep an open mind about other occupations that may be youth-oriented."

San Jose Business Tax
Many youth sports referees and umpires were surprised to learn that San Jose expects them to pay either a city business tax of at least $150 or a $38 fee to process an exemption claim.

The city charges businesses a tax starting at $150 a year.

Businesses or independent contractors earning less than $22,000 a year can qualify for a tax exemption, but must pay a $38 fee for city finance officials to verify income they report on state and federal tax forms.

San Jose collects about $250,000 a year in exemption processing fees from some 7,200 businesses and contractors.

San Jose has sent notices to businesses and contractors who filed state tax forms but not city business taxes advising of an "amnesty" through March 29 in which they can pay delinquent taxes without penalty.

Many youth sports officials, referees and umpires were blindsided by the notices and unaware of any tax or fee liability.

San Jose's Rules and Open Government Committee will reconsider applying the tax or fees to youth sports officials Feb. 13.